Faster recovery in CV segment remains key for Ashok Leyland stock

Despite increase in freight rates, operator profitability yet to reach normal levels

Ashok Leyland 'BADA Dost'
The management indicated that cost savings, which stood at Rs 550 crore in 2019-20, would continue in the current financial year

The Ashok Leyland stock has gained 25 per cent over the past month on expectations of a gradual recovery in the commercial vehicle segment. The gains in the near term are likely to sustain, given better-than-expected July-September quarter results, higher margins, and falling debt levels. The near-term trigger is the operating performance in the second quarter. Even as revenues declined 28 per cent, led by a 33 per cent fall in volumes, operating profit margins at 2.8 per cent were much higher than the 0.5 per cent that the Street had anticipated. While higher realisations ...